Morupule B sale deal hits the rocks
Mbongeni Mguni | Friday June 8, 2018 16:22
Government, as the sole shareholder in the Botswana Power Corporation, had been leading talks with China Machinery Engineering Corporation (CMEC), a state-owned company and related entity to China National Electrical Engineering Corporation (CNEEC), which built the 600MW power station.
Information reaching Mmegi indicates that talks broke down largely due to differences over the offer submitted by the Chinese for the power station. The two parties had already clashed over terms of the deal where government wanted the Chinese to commit to using non-Chinese material for the remedial works at the power station.
Built at a cost of P11 billion, Morupule B by last year had cost overruns estimated at P4 billion, with a root cause analysis placing the majority of the blame on CNEEC.
The deal to sell the power plant began in 2016 and had been passed to the Public Procurement and Asset Disposal Board (PPADB), which this week announced that CMEC’s exclusive tender had been cancelled.
Earlier this year, officials close to the deal said a proposal had been received from the Chinese, which, if government agreed with, would result in a PPADB tender making an offer exclusively to CMEC.
“The sale was due to be complete by March, following quite a lengthy process which is to be expected in a transaction of this nature,” an official involved in the matter told Mmegi. “It would appear the deal is off the table for now.”
Other sources stressed that the government still intends to divest of its interest in Morupule B.
“This does not mean the efforts to divest are over. There could be another process taken, just not this particular one.
“For now, however, BPC will continue owning and operating the plant and this could easily become the arrangement government prefers going forward,” insiders said.
Mineral Resources, Green Technology and Energy Security minister, Eric Molale declined to comment when contacted by Mmegi, referring questions to his public relations officer, who could not be reached. BPC officials were also unavailable for comment.